Dear Momentum Options Subscriber,
The bulls got a lift this morning after overseas markets trended higher on optimism that Greece may be moving closer to securing a deal for its third financial bailout. Talks with creditors were held over the weekend, and an agreement could be reached by tomorrow.
Although the news has been pretty much baked into the cake, it has helped ease concerns over the state of the country — for the time being.
China’s stock market enjoyed its best one-session gain in a month overnight, commodities are rebounding, and that atmosphere has helped the bulls push the first layers of resistance today.
The Dow is currently up 217 points to 17,590, while the S&P 500 is higher by 23 points to 2,101. The Nasdaq is advancing 55 points to 5,098, and the Russell 2000 is adding 11 points to 1,218.
My commentary is a little short this afternoon, as I have a New Trade that I would like us to get into. I could have additional plays ahead of the close, but, for now, let’s go nibble on a new call trade.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 78-26-2 (74%). All trades are dated and time stamped so new subscribers can look at the past history to see how the trades have played out.
Do not risk more than 5% of your trading account on any one trade but do try to take all of the trades. Please remember, all “Exit Targets” and “Stop Targets” are targets. You should not have any “Hard Stops” entered to close any trades or “Exit Orders” in your brokerage account unless I list one. I will send out a “Profit Alert” or “New Trade” if I want you to close a position or if a new trade comes out. Otherwise, follow instructions at all times in the 9 a.m. and 12 p.m. – 1 p.m. updates. Also, I will usually give you a heads-up if I think I’m going to send an email outside of these time frames.
All prices given in this update are current as of 12:35 p.m. EST.
I hereby disclose that I will be participating in the following trade(s). Every Momentum Options recommendation is listed with the price at which I entered my own position. If the price is slightly different than my recommended entry or exit price when you receive the alert, don’t let that keep you from getting into or out of a trade. Occasionally, you might even get a better “fill” price than what is posted in the portfolio.
KB Home (KBH, $15.14, up $0.07)
Buy to open the KBH October 16 calls (KBH151016C00016000, $0.52, up $0.02) at current levels.
I like these call options at current levels. These are the regular monthly options that expire on Oct. 16. I will provide the parameters of the trade in tomorrow’s Pre-Market Update.
Shares of KBH are trying to hold their 200-day moving average, and a close above $15.25 would be slightly bullish. There is additional resistance at $15.50, $15.75 and the 50- and 100-day moving averages.
“Golden crosses” have formed on the chart, with the 50- and 100-day moving averages crossing above the 200-day moving average in July. The 52-week high is north of $18. Support is at $15-$14.50.
Krispy Kreme Doughnuts (KKD, $17.68, up $0.15)
KKD November 16 puts (KKD151120P00016000, $0.70, down $0.05)
Entry Price: $0.60 (8/6/2015)
Exit Target: $1.20
Stop Target: $0.65 (Stop Limit)
Action: Set a Stop Limit at $0.65.
Near-term support is at $17.50. A close below this level will likely get $17-$16.75 in play. Resistance is at $18, followed by $18.50-$18.75 and the 50- and 100-day moving averages.
SPDR Gold Trust ETF (GLD, $105.94, up $1.29)
GLD September 98 puts (GLD150918P00098000, $0.33, down $0.18)
Entry Price: $0.82 (7/28/2015)
Exit Target: $1.65
Stop Target: None
Action: A mini trading range has been forming since late July. Resistance at $105-$106. A move below $104-$103.50 should get $100 and below in play.
Trades on Hold — other 2015 Portfolio Open positions (1): These are trades that are still open in the portfolio but are down over 50%. They have longer expiration dates and are on “hold” but are not worth mentioning until they turn around. This means I would not open any new positions. I’m still keeping track of the trades and will record the results accordingly when the trade closes or if the options expire. Click on the Open Trades and Closed Trades pages to see all open and closed positions.
Rigel Pharmaceuticals (RIGL) September 5 calls (from 6/4/15) — Continue to hold.
Editor and Chief Options Strategist